By OGJ editors
HOUSTON, Dec. 15 -- Husky Energy Inc., Calgary, has set a capital budget of $3.1 billion for 2010, up 20% from 2009 and focused on areas with the highest potential returns, particularly Western Canada heavy oil and oil sands, Eastern Canada offshore developments, and Southeast Asia developments.
“The company is poised to take advantage of the forecast economic cycle and to pursue business growth,” said John C.S. Lau, president and chief executive officer.
Capital investments allocated in 2010 will enable Husky to position its medium and long-term growth while maintaining Canadian upstream production, officials said. The increase in annual oil production is expected to offset the reduction in natural gas production due to low gas prices. Husky is ready to increase gas tie-ins and production if commodity prices strengthen.
Upstream projects
Meanwhile, the North Amethyst subsea tie-back work is complete, and drilling of development wells will be a major focus in 2010. Production from North Amethyst is expected in the first quarter and will ramp up during the year as new wells are tied-in.
Engineering and construction contracts will be placed to advance the Liwan gas project on Block 29/26 in the South China Sea, with project sanction expected in early 2010. The West Hercules deepwater rig will drill 6-8 exploration, delineation, and development wells during 2010. The recently discovered LiuHua gas field will be developed in conjunction with Liwan gas field, realizing synergies by sharing development facilities.
Husky holds a significant land position in Western Canada. The company's capital program is focused on growth of the upstream production through the use and application of enhanced oil recovery technology. In 2010, Husky plans to increase capital spending by over 65% to $1.2 billion focused on its heavy oil properties, EOR projects, and unconventional gas holdings.
Significant progress on the Sunrise Oil Sands Project has been made, officials said. A review of the project achieved material reductions in capital costs and improved project efficiencies. Front-end engineering and design work will be completed in the first quarter, targeting first production in 2014.
Midstream, downstream projects
Midstream, Husky will spend $170 million largely on plant maintenance, pipelines, infrastructure, and related operations. The Lloydminster upgrader is planned to have a 45-day maintenance turnaround in the third quarter.
Capital expenditure for downstream is forecast at $465 million, focusing on engineering and maintenance work at the Lima refinery and the BP-Husky refinery in Ohio. Continuous improvement and maintenance work are planned for the Canadian ethanol, refining, and retail facilities in view of acquisition of downstream assets.